Adobe Systems Inc. (ADBE, Financial), the company famous for its Portable Document Format (PDF) reader, said fiscal second-quarter revenues increased 24% year over year on strong profit momentum across its digital media and experience businesses.
The San Jose, California-based company reported a record $2.2 billion in revenue for the quarter ending June 1, outperforming analyst expectations by approximately $500 million.
Company continues strong profit momentum across its business segments
CEO Shantanu Narayen said the results underscore the company’s mission to “enable transformative digital experiences” across multiple areas, including content creation, predictive analysis and commerce. The company’s digital media and digital experience business segments reported revenues of $1.55 billion and $586 million, up 22% and 18% from the prior-year quarter.
Narayen said the week of June 11 to 15 marks the 25th anniversary of the PDF, “the innovation that ushered in the era of digital documents.” The CEO mentioned that users have downloaded over 800 million PDFs in Acrobat Reader on mobile devices per month. Additionally, Adobe Scan, the company’s app that performs scanning and text recognition services, has been downloaded over 10 million times.
Company offers good growth potential relative to competitors
GuruFocus ranks Adobe’s profitability 9 out of 10 primarily due to expanding profit margins and a Piotroski F-score of a perfect 9. The company’s operating margin is near a 10-year high of 31.2% and outperforms 94% of global competitors, which include Salesforce.com Inc. (CRM, Financial), Intuit Inc. (INTU, Financial), Red Hat Inc. (RHT, Financial) and Autodesk Inc. (ADSK, Financial).
Adobe has good growth potential relative to its peers even though its price-sales ratio is near a 10-year high of 16.80 and ranks lower than 92% of global competitors. Table 1 summarizes key financial data for Adobe and its competitors.
| Ticker | Company | PS Ratio | Piotroski F-Score | Altman Z-Score | Operating Margin % | ROE % |
| ADBE | Adobe Systems Inc | 16.42 | 9 | 14.06 | 31.2 | 23.1 |
| CRM | Salesforce.com Inc | 9.12 | 6 | 5.86 | 3.93 | 5.26 |
| INTU | Intuit Inc | 9.26 | 7 | 13.24 | 26.95 | 76.27 |
| RHT | Red Hat Inc | 10.95 | 6 | 6.05 | 16.18 | 18.87 |
| ADSK | Autodesk Inc | 14.13 | 4 | 3.87 | -15.39 | -475.65 |
| Application Software Industry Median | 3.92 | 5 | 3.64 | -2.06 | -5.36 | |
Table 1
Several gurus invested in Adobe during the first quarter, including Jeff Auxier (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio) and Daniel Loeb (Trades, Portfolio).
Disclosure: No positions.
